Americans handing out a million dollars a day in Iraq

PAULINE JELINEKAssociated Press

Published Tuesday, May 27, 2003

WASHINGTON (AP) -- U.S. dollars are flown to Iraq by the planeload. An Army clerk pays Baghdad electricians from a footlocker full of cash. Soldiers string barbed wire at the site where Iraqi retirees get their pensions.

American troops and officials are handing out $1 million a day in Iraq, according to the Pentagon-led Office of Reconstruction and Humanitarian Assistance.

That spending is in addition to multimillion contracts awarded by the State Department and the roughly $1 billion a week it takes to keep U.S. troops in Iraq.

Officials say they're developing an efficient and well-controlled system for getting money back into the country's economy again. But financing reconstruction in Iraq is a hugely complicated affair, with money coming in from at least a half dozen sources and going out in everything from tiny cash payments to contracts worth hundreds of millions of dollars.

The Defense Department, infamous for its long-standing money management problems, will soon send a dozen auditors to oversee the spending.

Two months into the campaign in Iraq, the Bush administration has declined to say what reconstruction might cost or how long it thinks occupying forces might stay there.

"When is the president going to tell the American people that we're likely to be in ... Iraq for three, four, five, six, eight, 10 years, with thousands of forces and spending billions of dollars?" Sen. Joseph Biden asked Pentagon officials last week in a hearing.

"It is very difficult to predict" how long it will take, Deputy Defense Secretary Paul Wolfowitz responded.

It is also unclear exactly how much they'll have to spend. But the finances will be "frightening difficult and legalistic," said one treasury official privately, partly because the pool of money to be spent is a mix of money that belongs to Iraqi and has been frozen by the United Nations, the United States and other countries; money that might be pledged by coalition members; money Congress appropriated in the defense budget, and huge caches of dollars, gold and other assets found hidden around the country by the former regime.

Money taken from each of those pots comes with its own rules on how it can be spent -- and all the rules aren't yet clear, officials said.

Cash used so far comes from $1.7 billion of Iraqi money frozen by the United States under sanctions since 1990, Pentagon and Treasury officials said. Transferred at the war's start into an account at the Federal Reserve Bank of New York, it's shipped to Iraq as needed.

Auditors are to leave sometime around June 1 and stay three to six months. They include representatives from the Pentagon's inspector general, comptroller and joint chiefs of staff; the congressional investigative General Accounting Office; and the White House Office of Management and Budget.